In current trading, gold prices edged down towards $1,290 an ounce, giving in to pressure from stronger equities while investors favored riskier fare. For December delivery, the most actively traded contract was down recently 0.06% or $7.20, at $1,234 per troy ounce on New York Mercantile Exchange’s Comex division.
Amnesty in the stock market meant bad news for the price of gold. Both the S&P 500 index and the Dow Jones Industrial Average were up, 1.2% to 22.19 points at 1884.95 and 1.2% to 16307.70, respectively.
According to Bob Haberkorn, senior commodities broker with RJO Futures, bouncing equities have reduced interest in gold, thereby easing some of the limitations and concerns from safe-haven buying in the gold market.
Gold reached a one-month high earlier this week as concerns of a global shutdown loomed and generated a serious downdraft in stocks. Based on precious metal being considered as a store of value and a hedge against economic unrest, gold and stock prices typically move in opposite directions. In comparison, a brighter future usually benefits equities on growth in the US.
US gold futures for June delivery were down $2.50 per ounce at $1,293.30 as was spot gold, down 0.2% at $1,292.75 an ounce at 0937 GMT. In 2014, gold has climbed 7%, primarily because of a strong first quarter, setting a range between $1,285 and $1,315 an ounce since the middle of September.
SPDR Gold Trust, the top gold-backed exchange traded fund in the world, caused a slowing of investor interest as an outflw of 2.39 tonnes to 780.46 tonnes this past Monday were recorded, making this the first outflow since early May. Volatile prices also weakened physical demand across top consumer Asia.
A better-than-expected US housing market and boost in US consumer confidence affected the price of gold as well. Housing rose 6.3% last month from the month prior, surpassing forecasts of an increase of 4.6%. At the same time, the preliminary October sentiment index from the Thomson-Reuters University climbed to 86.4 from the final 84.6 September reading.
The price of gold was also impacted by the US dollar, which increased against both the Euro and Yen. Recently, the dollar changed hands for 106.60 Japanese Yen, a jump from the earlier number of 106.13. In the meantime, the Euro declined from its earlier number of $1.2837 to $1.2772.
Since gold is traded in US dollars, it becomes more expensive for foreign buyers when it gains strength against other country’s currencies. Platinum and palladium prices also experienced a rise in response to encouraging European car sales data since both are used in exhaust filters, thereby causing their price to be more sensitive to changes in demand for the global automotive market.
For January, platinum delivery was also up 0.5% or $6.60, trading on the Nymex at $1.258 per troy ounce whereas December’s delivery for palladium rose 1.2% or $9 to $755 per troy ounce. In September, European car sales increased to 1.24 million vehicles, up from the start of 2014 to 9.57 million, a 6.1% jump.